Matt Pells, Product Manager, Transfer Agency, Bravura Solutions, writes that investor appetite for private credit, infrastructure and real estate is accelerating, driving rapid uptake of hybrid and interval fund structures.
In response, new fund formats like the UK’s Long-Term Asset Fund (LTAF) are opening the door to a broader investor base, with the IA recognising private markets as key strategic priority.
But this isn’t a regional trend. From London to Singapore, demand for private assets is reshaping fund strategies. According to Partners Group, the global market for private credit, equity, infrastructure and real estate could double to USD30 trillion by 2033.
Private markets may power the next phase of growth globally – but can fund groups meet the operational and liquidity challenges that come with it?
Supportive regulation
The growth of this space is well supported by a favourable regulatory environment. Regulatory reforms including LTAF in the UK, as well as ELTIF 2.0 and ESMA’s RTS in Europe, have been mirrored in others markets with similar aims to boost non-bank financing and widen investor access. In the US, a landmark executive order signed in August now permits 401(k) retirement plans, which together hold roughly USD9 trillion and serve more than 90 million Americans, to include positions in alternative investments such as private equity and real estate. This represents a huge expansion of retail investors’ access to asset classes traditionally seen as reserved for institutional investors.
Alternative funds are increasingly mainstream. But, for this movement to be an opportunity rather than a risk, careful liquidity management is essential. There are different variables at play – redemption cycles, currency and regulatory requirements differ depending on where assets are domiciled. In times of market stress, it becomes even harder to maintain liquidity across borders.
One of the greatest challenges lies in the global patchwork of fund infrastructure. Settlement timelines, reporting requirements and communication standards can differ hugely by region, raising costly problems for fund groups.
Many firms still operate with legacy systems in place which were designed for simpler structures. Where these older systems and operational processes persist, they can hamper the adoption of the real-time liquidity modelling tools needed today.
Mandated liquidity tools
Regulators worldwide are keenly aware of these issues and are taking steps to tackle them. EU regulator ESMA is bringing in new rules from April 2026 which will require fund managers to use at least two approved liquidity management tools (LMTs) to maintain liquidity and protect investors, especially in times of market stress.
The International Organization of Securities Commissions (IOSCO) issued updated guidance on liquidity risk management in May 2025, urging fund managers to adopt robust, globally consistent practices. Meanwhile, the US has long had SEC Rule 22e-4 in place, requiring liquidity risk management programmes for open-ended funds. Global investors will require tech infrastructure that is flexible enough to comply with these different regulatory regimes simultaneously.
Preparing for liquidity shocks
All these operational challenges take place against the backdrop of volatile markets, with geopolitical instability and inflation surprises impacting liquidity. Liquidity shocks can come from anywhere and, no matter their location, illiquid, asset-heavy strategies always face greater redemption pressures.
While all this paints a rather challenging picture, there are liquidity solutions already which could help protect investors while allowing them to tap into the opportunities alternative asset classes afford.
Modern liquidity management tools can unify monitoring, modelling and investor communications across multiple jurisdictions. They can also provide the ability to scale – essential when liquidity events trigger sudden spikes in redemption requests or trading volumes.
Digitalisation and tokenised fund structures are enabling almost real-time liquidity insights and fractional ownership. It is early days though – the industry as a whole is not ready to fully adopt this technology just yet, and regulators are behind the curve. For instance, according to ValueExchange approximately 80% of American digital asset activity is conducted offshore due to domestic limitations.
Why collaboration is needed
Industry collaboration is the missing piece of the puzzle. A lack of cross-border standardisation in liquidity management reporting is a barrier to scale. We need to see fund managers, custodians and distributors working together more effectively for real-time liquidity monitoring. It can be done. T+1 settlements have been successfully adopted in North America, showing the importance of automation and funding preparedness to avoid liquidity bottlenecks. A similar collaborative approach will be needed if liquidity management in hybrid funds is to keep pace with demand. Establishing an industry standard liquidity management solution would help support multiple asset types across borders.
Liquidity risk has become central to the success or failure of complex investment structures designed to meet changing investor appetites.
The promise of growth, diversification and yield is attracting investors, but these strategies bring operational complexity. Hybrid structures blur the lines between open and closed-ended funds, mixing liquid and illiquid exposures. LMTs are becoming increasingly important to fund managers wanting to be successful in this space.
Practical steps
There are a few practical steps firms can take:
· Adopt digital-first liquidity infrastructure capable of supporting multiple fund types, jurisdictions and regulatory regimes.
· Build advanced stress-testing frameworks, modelling not only single-market redemptions but also cross-border contagion scenarios.
· Enhance real-time communication channels, ensuring investors and regulators can receive accurate, timely information during periods of market stress.
· Plan for scalability – liquidity events often bring surges in transaction volumes, so systems must expand seamlessly under pressure.
These are not simply compliance measures. Done well, they can transform operational resilience into a source of competitive advantage.
